2026-VIL-1414-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs – Utilization of Status Holder Incentive Scrips (SHIS) for import of goods falling beyond the permissible scope of exemption notification - Import of capital goods - Scope of capital goods - Appellant, a manufacturer of steel products accorded Trading House status, imported goods such as gaskets, bushings, bearings, gear reducers, main springs, whims bottom parts and shock absorbers under Status Holder Incentive Scrips (SHIS) licences in January 2013 to November 2013 for setting up Coke Oven Plant, Pellet Plant, Arc Furnace, Steel Melting Shop, Blast Furnace and modernization of captive power plant - SCN issued alleging that the goods imported were parts/spares/components of capital goods and duty had been debited in excess of the permissible ceiling of 10% of the value of SHIS scrips, in violation of Conditions 4(i) and 4(iii) of Notification No. 104/2009-Cus. dated 14.09.2009. The lower authority confirmed demand of duty along with interest and penalty - Whether the goods imported by the appellant constitute capital goods under Notification 104/2009 or only parts/spares subject to 10% restriction - HELD - The definition of capital goods in Notification 104/2009 is of wide import and covers plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, including those required for replacement, modernization, technological upgradation or expansion - All the items imported by the appellant squarely fit within the definition of capital goods as defined in the Notification. The goods imported are not merely spares or parts but are capital goods required for modernization of the plant. The restriction of 10% applies only to components, spares or parts of capital goods imported earlier, and not to fresh import of capital goods including accessories. The appellant has correctly availed the benefit of Notification 104/2009 for import of the said goods - Demand of duty set aside and penalty is not sustainable – The appeal is allowed
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